Trump threatens more tariffs as EU's levies kick in

WASHINGTON/BRUSSELS • United States President Donald Trump yesterday threatened to impose 20 per cent duties on all imports of European Union-assembled cars as the bloc’s tariffs on US products went into effect – the latest shots fired in what increasingly looks like a global trade war.

“If these tariffs and barriers are not soon broken down and removed, we will be placing a 20 per cent tariff on all of their cars coming into the US. Build them here!” Mr Trump wrote on Twitter.

The EU, the world’s largest trading bloc, imposed levies on €2.8 billion (S$4.4 billion) of American products including Harley Davidson motorcycles and Levi’s jeans, in response to US duties on its steel and aluminium exports that Washington justified on national security grounds.

EU Trade Commissioner Cecilia Malmstrom said this week that the 28-nation bloc was “left with no other choice” but to impose tariffs of its own after the “unilateral and unjustified decision of the US”.

Mr Trump has previously threatened to penalise EU cars on national security grounds, and his administration has launched an investigation into the issue.

The retaliatory moves will further fuel jitters on world stock markets that are already alarmed by trade tensions between the US and China. Mr Trump threatened on Monday to hit US$200 billion (S$272 billion) of Chinese imports with 10 per cent tariffs if Beijing retaliates against his previous announcement to target US$50 billion in imports.

Chinese President Xi Jinping, in a gathering with foreign business executives on Thursday, lambasted “protectionism, isolationism and populism”, and again vowed to open up Asia’s largest economy.

Together with US tariffs against Mexico and Canada, the trade battles have raised the spectre of a global trade war, spooking financial markets that fear major consequences to the global economy.

“We have a trade war – and it is an escalating trade war,” said Mr Robert Bergqvist, chief economist of Swedish bank SEB.

Brussels first drew up the list in March when Mr Trump initially floated the 25 per cent tariffs on steel imports and 10 per cent on aluminium, which also target Canada, Mexico and other close allies.

The list does not specifically name brands, but European Commission chief Jean-Claude Juncker spelled out in March that the bloc would target “Harley-Davidson, bourbon and Levi’s jeans”.

Cranberries, cranberry juice, orange juice, sweetcorn and peanut butter are among the food products targeted. The list also hits clothing, along with bed linen and men’s leather footwear, and some make-up and steel products.

Mr Juncker said on Thursday that the US decision to impose tariffs “goes against all logic and history”. European consumers would be able to find alternatives, European Commission Vice-President Jyrki Katainen said.

“If we chose products like Harley Davidson, peanut butter and bourbon, it is because there are alternatives on the market. We don’t want to do anything that would harm consumers,” he said on Thursday.

“What is more, these products will have a strong symbolic political impact.”

Transatlantic ties are at their lowest level for many years due to rows over a host of issues including the tariffs, the Paris climate agreement, the Iran nuclear deal and the new US Embassy in Jerusalem.

Relations plumbed new depths at the recent Group of Seven summit when Mr Trump abruptly rejected the joint statement and bitterly insulted his Canadian host, Prime Minister Justin Trudeau.